10 Best Stocks So Far in 2012

The 5 best Dow Jones and S&P 500 stocks at the midway point

#5 S&P Stock: Regions Financial

Sector: Financials
YTD Gain: 56%

Regions Financial (NYSE:RF) is, obviously, a regional financial stock. This sector has been doing quite well in 2012, with some standouts doing better even then major financial stocks that have been bouncing back.

That’s because major financial stocks like Bank of America (NYSE:BAC) continue to suffer under poor acquisitions, massive mortgage debt and the ire of regulators after the “too big to fail” nonsense of 2008. Regional banks, while still subject to safeguards enacted by the Federal Reserve, weren’t as “levered up” during the meltdown and thus have an easier time showing regulators and investors they are in good shape.

Specifically, Regions operates throughout the South, Midwest and Texas. This area isn’t exactly booming — and in fact, 2012 will be Regions’ first profitable year since before the financial crisis gutted its balance sheet. But as with Bank of America, this is a case of being “less bad.” Regions still is down about 80% from pre-Lehman levels, but that hasn’t stopped it from rallying strongly to start the year on turnaround hopes.

Of course, while there are differences between RF and BofA, the fact remains that bad debt and consumer confidence are troublesome for any bank these days. That’s important to keep in mind if Regions Financial is to build on its 2012 gains.